«Business changes the world, and family businesses make it better,» Henry Ford once said. Family businesses create between 50 and 80% of working places, demonstrate sustainability and long-term high profitability, and are based on a strong corporate culture and values. Family businesses are the backbone of most economies in the world, but need analysis, support and training. The Family Business Center of the Lviv Business School of UCU (LvBS), together with the Fama Sociological Agency, conducted research into the particularities of the functioning of family businesses in Ukraine. The survey «Family Business in Ukraine: Features of Starting, Running, and Succession to the Next Generations» was conducted with assistance from the German Government as part of the project «Improving framework conditions for trade in Ukraine», undertaken by the German federal company Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH.
Taking part in the survey for the study “Family Business in Ukraine: Features of Starting, Running, and Succession to the Next Generations,” which was conducted during June – August 2019, were owners of family businesses (small and medium-sized) operating in Ukraine (Lviv, Ivano-Frankivsk, Kyiv) and included representatives of:
- Businesses where several generations of the family are the founders and managers and the business is inherited;
- a business that is created by several family members;
- a business for the establishment of which capital was borrowed from a family member.
Key research objectives:
– Profiling of the family business using the following criteria: type of family, form of ownership structure, management structure, succession in the family company, sphere of activity, geography of activity (local, regional, national, international).
– Diagnosis of company problems (problems-causes, problems-consequences, diagnostics of problems related to involving relatives in conducting business).
– Research on the challenges facing family business owners in Ukraine.
– Analysis of the advantages and disadvantages of running a family business.
The survey was multifaceted and was implemented in two stages:
- A survey of family business owners was conducted with a structured questionnaire using two methods: online surveys and face-to-face surveys. Respondents were selected for the survey to ensure the selection of typical representatives of family businesses and who are residents of Lviv, Ivano-Frankivsk, Kyiv or other urban areas within the respective regions.
- Conducting in-depth interviews with family business owners.
Conclusions: family business and responsibility
During the in-depth interviews, we were able to determine interesting details about the values of family businesses, key benefits of running a family business compared to other types of ownership structures. Most respondents referred to trust as a key asset in the family business («… for example, in financial matters. Conditionally, you know that a relative will not betray you», «Trust, common goals, vision, values – together you can achieve incredible results, because everyone has an understanding of the common cause», «If the family is accustomed to trusting each other and sharing information, so will the company»). Among the important features of a family business is also the priority of values and strategic goals over material and financial factors (the opportunity to earn here and now). It is obvious that the factor of responsibility is always present in family companies: responsibility for common goals, for the values of the company, which are preserved for generations; responsibility to the heirs, as well as to the society within which the company operates and develops. Most family-owned companies, in one way or another, join or initiate social projects themselves, invest in NGOs, and regularly make charitable contributions to various initiatives.
* Reference: The LvBS Family Business Center was created to help address the issues of effective family business management and succession in family businesses in Ukraine. The LvBS Family Business Center is one of the academic centers of the UCU Lviv Business School, which follows global trends and offers up-to-date solutions for Ukrainian businesses within its environment. Work on research and other activities at the LvBS Family Business Center is ongoing, and we recommend that you read some helpful articles and publications.